Advisory

VACATION PLANNING Start saving for that exciting outing

Vacations are as important for our overall wellness as healthy food and exercise. In today’s fast-paced world when we list down our priorities we often forget about relaxation and vacations. Most of us skip vacations due to lack of money. It is time we give our vacations priority and start saving and planning. Here’s how to do it.

WORDS: SANGEETA SINHA

We often dream of a nice, relaxing and happy holiday with our loved ones but it does not materialise many times due to lack of advance planning and saving. Taking vacations is good for your health; a lot of studies have highlighted the cardiovascular health benefits of taking a vacation.

Relaxing and getting away from your worries — both personal and professional — can help lower anxiety, heart rate, and blood pressure, which can in turn lower the risk of heart disease and chronic illness caused by stress.

The most important part of any vacation is to fit it in your budget and for that planning is the key. First of all you need to zero-in on your destination. Destination and the duration of your vacation should be such that they fit in your budget and do not hit your bank balance.
Next you can research for holiday packages. Travelling off-season is also a good idea if you wish to you save money.

Travel companies offer many plans. You can go for group holiday, family holiday or you also have the option to get the package customised. If you are the adventurous kind you can also go solo.
For most of us the biggest constraint in going for a vacation is finance. But these days with advance planning and regular saving you can enjoy your dream vacations. Understanding the requirement of market, a lot of travel agencies have come up with packages which can help you plan and save money for your vacation.
Some of the popular schemes are listed below. Do your own research and find out about such schemes floating in the market. Based on your requirement you can choose the scheme and plan your vacation.

SAVINGS HOLIDAY SCHEMES
These days the concept of ‘savings holiday schemes’ is very popular.

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These schemes are offered by travel companies where you can save for the holiday package at the current tariffs without worrying about the change in air fares and hotel tariffs during the time of travel.
HOLIDAY SAVING ACCOUNT
Many travel companies have come up with innovative plans that allow people to save money for big vacations.

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Holiday saving account is one such scheme where travel companies have tied up with banks like ICICI Bank and Kotak Mahindra Bank.
One travel agency offers a unique savings plan for holiday goers. Under this scheme you can save monthly amount in the form of a recurring deposit with the bank in order to avail a vacation package. The cost of the package you choose is divided by 13 and you pay for 12 months and at the end of the year, the maturity proceeds are transferred to the travel company to pay for your pre-selected holiday package. The company funds the balance amount i.e – the 13th installment – to purchase your package after factoring in the accrued interest.

HOLIDAY INVESTMENT PLAN
Holiday investment plans are also being offered by travel companies in partnership with various leading banks.

EMI SCHEME
You can opt for this scheme when you are ready for a vacation but tight on the budget. The EMI option being offered by many travel companies has large takers. Whether it is domestic or international holiday, you can choose your destination and divide all your expenditure into easy EMIs. You may have to pay minimum down payment and the rest is taken care of.
It is all about prioritising. A vacation has to be taken as a therapy and should be on our agenda. You don’t have to go for long or expensive destinations but break is something we all need for our overall wellness and productivity. Options are many, financing is also available…you just need to make up your mind.
So next time when you budget your expenses make sure you don’t miss out on the vacation.

HOW VACATION HELPS
Relieves stress – Stress can take a serious toll on your physical health. Chronic stress can be destructive to our bodies. Getting away from personal and professional stress can help your physical health
More productivity – Your productivity and focus increases after a good break. Continuous work with no breaks or vacations can make people feel blocked and distracted, and they have problems concentrating
Increases family bonding – Family vacations increase bonding and help forge closer bonds. They create more memories than any other activity
Makes you happy – People who take regular vacations feel extremely happy with an overall feeling of well-being

FUND YOUR VACATION
Planning and scheduling well can help you save a good deal on your vacation
Plan well in advance so that you can save on air fare
Keep a separate fund for vacations; many schemes are being offered by travel companies – study them well
Recurring deposit with your bank is a good option if you are saving for a holiday 1-2 years away
For greater flexibility, and possibly higher returns, you can opt for short-term debt funds; they offer stable returns and are not very volatile.
For bigger vacations SIP is also a good idea; if you have 3-4 years to plan then you can add equities too
Keep your eyes and ears open for latest updates

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SOME TIPS
Choose your destination and duration keeping your budget in mind
Next look for best packages to your selected destination
Research on your destination; it helps making your own itinerary
One of the best ways of going about it is visiting the country’s official tourism website and read their recommendations
List all essential items you would need so that you don’t miss any important thing
If you are travelling abroad, a valid passport and tourist visa should be in place
Do not forget to check if there are some country guidelines on specific vaccinations you might have to take before your visit
Don’t miss on the travel insurance

STAYCATION
A period in which an individual or family stays home and participates in leisure activities within driving distance, sleeping in their own beds at night. They might make day trips to local tourist sites, swimming venues, or engage in fun activities such as painting, hiking or visiting museums. When on a tight budget and when annual family vacation becomes difficult it can be used as a cheaper substitute where you save on air tickets, accommodation etc. It is called fun vacation or stay-at-home-vacation.

Finance terms simplified

Financial terms often intimidate us. But once you understand the terms they look simple. Read on for some investment terms simplified. Self-knowledge is always the key to good investment

WORDS: SANGEETA SINHA

SIP (Systematic Investment Plan)
In SIP an investor invests a fixed amount of money monthly or quarterly in a mutual fund. The investor is allocated a number of units according to the current NAV (Net Asset Value). Every time a sum is invested, more units are added to the investor’s account.
Instead of making one heavy investment it allows you to make small periodic investments. It is like a recurring deposit where you invest in a mutual fund without altering your financial liabilities.
IPO (Initial public offering)
Also colloquially called ‘going public’, IPO is a type of public offering in which shares of a company are made open to public; the owners of the company give up part of their ownership to stockholders and they transform from private to public company.
In simple words, IPO is a source of collecting money from the public for the first time in the market to fund its projects. In return, the company gives shares to the investors of the company.
NFO (New Fund Offers)
NFO is a security offering where investors may purchase units of a closed-end mutual fund. This offering, similar to a stocks’ initial public offering (IPO) allows the underlying company to raise capital for the purpose of buying securities. The difference being that for an NFO there is no past performance as it is a new fund.
Balanced Fund
A balanced fund combines a stock component, a bond component and sometimes a money market component in a single portfolio. It is a type of mutual fund that has a policy of diversifying shareholder assets between both stocks and bonds, providing a one-stop solution for those who want everything in a single package. These are ideal for investors looking to retire in the near future and have a moderate risk appetite.
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Consolidated Account Statement (CAS)
Due to a recent amendment in SEBI regulations, Consolidated Account Statements are being issued which contains complete information of your portfolio in one statement.
It covers all schemes and mutual funds and can be viewed online. You can now request for a CAS across your entire holdings in mutual fund scheme services by Mutual Fund Registrars, CAMS, Karvy, FTAMIL and SBFS.
Mutual Fund
A mutual fund is a professionally-managed investment scheme. The number of units you purchase represents your share of holding in the particular scheme. The units can be purchased or redeemed at the fund’s current Net Asset Value (NAV). The NAVs fluctuate and so the investor also participates proportionally in the gain or loss of the fund.
All mutual funds are registered with SEBI with strict rules created to protect the interests of the investor.
Debt Fund
Debt funds are mutual funds that invest in fixed income securities like bonds and treasury bills. Debt funds are preferred by individuals who are not willing to invest in a highly volatile equity market.
Comparatively less volatile, a debt fund provides a steady but low income relative to equity. The main investing objectives of a debt fund are largely preservation of capital and generation of income.
ELSS (Equity Linked Savings Scheme)
These are tax-saving mutual funds that you can use to save income tax of up to Rs 1.5 lakh under Section 80C. ELSS funds have a lock-in period of 3 years and invest a majority of their portfolio in the stock market. Since these are equity mutual fund schemes which invest in stocks, invest in them only if you can handle the volatility in the stock market.
Equity Fund
An equity fund (also known as stock fund) is a mutual fund that invests principally in stocks. Stock mutual funds are principally categorised according to company size, the investment style of the holdings in the portfolio and geography.
AMC (Asset Management Company)
Asset management companies provide investors with more diversification and investing options than they would have by themselves. These companies charge service fees and they manage mutual funds, hedge funds and pension plans for clients.
NAV (Net Asset Value)
Net Asset Value is a fund’s market value per unit. It is calculated by dividing the total value of all the assets in a portfolio, minus all its liabilities. NAV is calculated at the end of every market day but it is advisable to look for annualised returns rather than daily returns while selecting a mutual fund for investment.
Load
Mutual fund companies collect an amount from investors when they join or leave a scheme. This fee is generally referred to as a ‘load’. Entry load can be said to be the amount or fee charged from an investor while entering a scheme or joining the company as an investor.
Exit load is a fee or an amount charged from an investor for exiting or leaving a scheme or the company as an investor.
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CAR INSURANCE DOES IT COVER ALL?

If you think everything damaged with your car is claimable then you need to read further

The recent Mumbai floods saw many stranded and damaged vehicles. It also made many realize that all kinds of damages may not be covered under the car insurance policy which one takes. It is a good idea to spend some time understanding what gets covered and what doesn’t. Read on as we try to cover the basics.
Rakesh filed a claim for his car engine being stalled as water entered the engine through the hydraulic lock; little did he realize that this comes under mechanical or electrical breakdown and therefore not covered under standard motor policy. Had he opted for add-on cover of engine protection he would have been covered.
It is important to understand the add-on covers and add those to your policy as per your requirement. Just going for a standard policy may not serve your purpose always. Add-on coverage can improve the value of your car insurance plan provided you make wise choices.
So, how to take the perfect car insurance policy?
While buying a vehicle we spend large amount of time and energy in choosing the vehicle but we generally don’t do the same while buying insurance policy for the same. And this is the reason that we often end up not having adequate protection or cover in case of any damage. It is a good idea to compare various insurance products and also understand the terms and conditions well.
A motor insurance cover generally offers two types of policies: liability only and package policy. Liability is mandatory and it does not cover damage to your vehicle. It is wiser to go for package policy which includes liability along with damage to owner’s vehicle and is called O.D cover.
Third party insurance is mandatory as per the Indian Road Safety Act and Indian Motor Vehicles Act. It provides you cover against damages caused to any third person, vehicle or property, but you cannot seek any claim for damage caused to your own self or your vehicle. Go for comprehensive cover that will protect you against damages caused to you and your car in an accident. It will also protect you against fire, theft etc. as per the plan you opt for.
But in spite of opting for comprehensive coverage often our claims are rejected and that is because we miss out on add-ons. Based on your requirement you buy add-ons for your car insurance. Sometimes these add-ons help you save huge amount of money.

SOME ADD-ONS
ZERO DEPRECIATION – This add-on entitles you to claim full cost of replacing damaged car parts; in case of standard policy only the depreciated value of car parts is reimbursable and not the replacement value.
ENGINE PROTECT – Engine protect helps when engine fails due to other natural calamities like floods. Basic policy does not cover this so with this add-on you can enhance your coverage. It generally covers damages like leakage of lubricating oil, gear box damage, damage due to water ingression etc. The scope of coverage varies from company to company so it is better if you read the policy carefully before you invest. This add-on is especially advisable for people living in flood prone area or if you have a high-end car.

RETURN TO INVOICE – RTI is an add-on option which covers the gap between the insured declared value and the invoice value of the car. The cost of the RTI is usually 10 per cent more than the standard policy and is offered by insurance providers till the vehicle reaches a predefined age limit.
QUICK ASSISTANCE OF ROAD – Quick assistance of road add-on enables basic services in case of an emergency while driving through a remote location. Such add-on policies can get fuel assistance, taxi and accommodation benefits when stranded in a remote destination. While some companies offer this service for small fee i.e. as an add-on insurance cover, others offer it as an in-built component of the base policy. Some companies extend this cover only for renewed and not fresh policies.
NO-CLAIM BONUS PROTECTION (NCB) – No-claim bonus (NCB) is a discount in premium offered by insurance companies if a vehicle owner has not made a single claim during the term of the motor insurance policy. This NCB starts at 20% and increases annually with every claim-free year up to a maximum of 50%. It directly translates into lower premium for the subsequent year. NCB add-on allows you to retain your accumulated no-claim bonus even if there is a claim, helping you preserve the discount available on subsequent year’s premiumPERSONAL ACCIDENT COVER – This add-on covers both owner as well as paid driver.
Several insurers offer this add-on, which, like any other personal accident cover, provides lump-sum compensation to the passengers insured, in case of death or permanent total or partial disabilities suffered during accidents.
Normally, the maximum sum assured under this add-on plan is around Rs 1 lakh per insured but may vary from insurer to insurer.

LOSS OF PERSONAL BELONGINGS – Loss of personal belongings add-on lets users report claim due to theft or apparent loss of personal belongings including laptop or electronic equipment from a locked vehicle.

DAILY ALLOWANCE – This add-on cover compensates you for the cost of hiring an alternative vehicle if your car is stolen or is under repairs. The amount could range from Rs 500-100 per day, depending on the car model.
The number of days for which the allowance is handed out can range from 10-15 days. However, depending on the insurer’s terms and conditions, this add-on cover is subject to certain exclusions too. This add-on is a unique concept and advisable to take.

KEY REPLACEMENT COMPENSATION – This add-on comes into play if you happen to misplace your keys or they get stolen.
The insurer will also compensate you for the cost of replacing your lock and key if your vehicle is burgled.
In case of the latter, however, you will have to produce the police complaint registered for the break-in which is mandatory and required as per rules.
Most of us are not aware of this add-on which is quite beneficial.

CONSUMABLES COVER – Another very beneficial add-on.
One can buy this add-on if one wishes to seek compensation for money spent on nuts and bolts, screen washers, engine oil, bearings and so on, in case your car meets with an accident.
The insurer will make a payout for the value of such consumables replaced which are normally excluded from claim amounts under standard motor insurance.
Generally, vehicles older than three years are not eligible for this add-on cover.

SOME HANDY TIPS

In the recent Mumbai flood many cars got damaged but very few could get their claims settled as many things were not covered in the standard insurance policy. We asked Swetank Shantanu, co-founder and partner of New Delhi based law firm Legal Consultus with around 18 years of professional experience in the field of Banking and Civil matters to advise our readers on how to be better protected and covered.
It is advisable for each and every person who is taking car insurance policy to go for the add-on cover some of which have been mentioned above. For instance, Zero Depreciation, Return to Invoice, Engine Protect, Personal Accident Cover, Quick Assistance of Road, No claim Bonus Protection, Loss of personal Belongings, Daily Allowance, Key replacement Compensation, Consumables Cover.
The benefits of these add-on covers are immense and one learns the importance of these add-on covers if faced with odd situations like the one that happened in Mumbai recently. Even otherwise, these add-on cover would always ensure your safety for all practical purposes.
As a matter of general practice, however it is often found that the car insurance policy is taken as a mere formality and one is guided by the amount and premium involved instead of the large scale benefit involved while going for add-on cover.
In most of the cases, it has been found that people are not even aware of the various add-ons and even if the agent tries to explain the importance of add-on cover, he is simply brushed aside without giving any serious thought about the same. In fact, if these add-on covers are also bought, it always helps when a claim is made as reimbursement becomes quite easy and comfortable.
It is advisable to get car insurance done after going through each and every detail as provided by the respective company of which the insurance is sought to be taken and person getting the insurance done must do a reality check and take the policy after fully understanding the basic tenets of the same. Add-on should also be bought after going through the terms and conditions of the same as the same would help in case of claim being made.
Including add-on covers in your car insurance policy might require few more pennies from your pocket, but it would mean a complete financial security towards loss or damage of your car.
A Motor policy is usually valid for a period of one year and has to be renewed before the due date. Pay the premium on time. No Insurer offers a grace period for paying the premium. In case of lapse of policy by even one day, the vehicle has to be inspected. Moreover, if a comprehensive policy is allowed to lapse for more than 90 days, the accrued benefit of NCB (No Claim Bonus) is also lost.

WHAT MOTOR INSURANCE COVERS

The damages to the vehicle due to the following perils are usually covered under OD section of the Motor Insurance policy:» Fire, Explosion, Self- Ignition, Lightning

» Burglary/Housebreaking / Theft

» Riot & Strike » Earthquake

» Flood, Storm, Cyclone, Hurricane, Tempest, Inundation, Hailstorm, Frost

» Malicious Act » Terrorism acts

» While in Transit by Rail/ Road, Inland waterways, Lift, Elevator or Air» Land slide / Rock slide

WHAT MOTOR INSURANCE EXCLUDES

The following contingencies are usually excluded under the Motor Insurance Policy:» Not having a valid Driving License

» Under Influence of intoxicating liquor/ drugs

» Accident taking place beyond Geographical limits

» While Vehicle is used for unlawful purposes

» Electrical/Mechanical Breakdowns.

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WHAT IS THERE IN A NAME?

But all is in the name when it comes to important documents like PAN, Aadhar, driving license, voter ID, passport etc. It is important that the information in all the documents is consistent; any mismatch can create problems. Get it corrected immediately.

WORDS: SANGEETA SINHA

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back to check his voter ID and realised that he had not got it updated for long and it had his old address. Then he decided to verify his father’s name from his passport, but here also there was a mismatch; the name had his grandfather’s also added.
His driving license also did not have the complete name of his father.
The problem was not his father’s name; it was that his father’s name was written differently in all his documents.

Many did not realise that name mismatch could be a problem till linking PAN with Aadhar was made mandatory. There should be no disparity in PAN and Aadhar details; be it name, date of birth, or other personal details.
Many, particularly those from the southern states, are having problems linking their PAN with their Aadhaar card as they have two different names on both the cards. Some have initials of surname in their Aadhar and expanded version in their PAN with the result the Income Tax department’s software is not accepting the integration of the two cards.
Some states like Gujarat automatically add your husband’s/father’s name in your PAN and later if your Aadhar is without your husband’s/father’s name it will again lead to mismatch.
The IT department can give only one solution – apply for a correction in one of the two cards.
Vikas Khanna, 49, decided one fine day to streamline his finances.

He looked for a good broker and was told that it is a simple process provided all his papers are in place. Vikas had all his documents online along with his PAN, Aadhar and passport for any kind of verification.
Little did he realise though that a simple process of KYC, which could have taken few minutes will make him run around to get his documents in order.
The problem – the name of his father in PAN did not match with the one in the Aadhar card. The name of his father had a spelling mistake in his PAN card and it did not match with the spelling in other documents. So it needed a correction.
To correct that he needed to apply for a fresh PAN and for that Aadhar is mandatory now; a new notification has been released recently whereby Aadhaar has to be quoted mandatorily while applying for PAN.
His Aadhar had only year of birth and not date of birth. So he had to get his Aadhar updated. Vikas went

NAME MISMATCH
So there was a complete name mismatch. Name mismatch can lead to lot of trouble and it is important that you make sure that all your documents are consistent in terms of your name, father’s name, date of birth etc.

To illustrate with another example: Deepa’s father died in a hospital in New Delhi.

The death certificate had his name in short form, with initials only, while all his other documents like bank accounts, PAN card had his name in full.
Deepa had a tough time trying to prove to banks and others that the name in the death certificate and the one in the account belonged to the same person. Everywhere she had to produce an affidavit to prove that the name in the death certificate and the one in other bank documents were of the same person.

POINTS TO CHECK
» Check all your documents for information consistency
» Your name should be written in the same way with same spelling in all your documents
» Your passport, driving licence, Aadhar, PAN, voter Id, bank accounts, mutual funds, stocks, insurance, and any other document should have your name written in the same way
» Check for other details too like father’s name, mother’s name, date of birth, place of birth for any mismatch.
» If you find any mismatch get it corrected immediately
» Name mismatch or any other mismatch can create trouble for you later
» Even if you are not facing any problems due to any mismatch it is advisable to get it corrected and keep all records in order
» For any death in the family, make sure that the name is spelled correctly in the death certificate; you will need the death certificate for later transactions
» Corrections/changes in documents have been made simpler and can be done online
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ASK THE EXPERT

‘Make sure information in all your documents is consistent’
Rabindra Kumar, a financial adviser with more than 17 years of experience, spoke to us about why it is important to keep your documents in order. Excerpts:

Why it is important to keep consistency in your name in all your documents?
It is very important to have same name in all your documents, be it your voter Id, driving license, PAN card, Aadhar, passport or any other document. Sometimes the husband’s name is added as middle name in some documents while in others the father’s name is added.
Nothing wrong in it but make sure that the same name you use in all your documents including your bank accounts so that you don’t have any problems in any kind of financial transaction.aadharone

How do I change my surname after marriage?
Any change in surname after marriage can be done through a court affidavit. Even otherwise if you wish to change your name it can be done by providing two evidences: school leaving certificate is considered the most primary evidence, but you can use other documents also like voter ID or driving license. You can even correct your father’s name by providing two evidences.

How important is Aadhar?
It is very important to keep your Aadhar updated with all the correct information. People are finding difficulties in linking their PAN to Aadhar because of information mismatch.
Aadhar is the key point for any financial transaction. Policies change from time to time and now you need to link your Aadhar to your phone, gas connection, bank and PAN. If there is any mismatch in information your transaction can be rejected.
You can easily update your Aadhar online, so make use of the online service or go to any Aadhar centre and get all information updated including your mobile number. It is important to keep your mobile number updated as for any transaction through Aadhar you will have to provide OTP which will come on your phone.

What are the problems faced by people?
Since policies are changing it is creating a lot of problems. Like earlier when Aadhar was made, only the year of birth was given; it was only later that date of birth was added. So people who don’t have date of birth in their Aadhar need to get it added.
Though the government is trying to streamline things, till everything is in order there can be issues.
Also, in the latest KYC form it is mandatory to give the name of both father and mother, while for PAN mother’s name is optional but father’s name is mandatory.

Any advice for our readers?
Make sure information in all your documents is consistent. Though you may find it tedious, spare some time and go through all your documents and get the corrections done.
The time you spend now in getting all information corrected will help you in the future. It is important to do it now, to avoid hassles later on.


INVESTING IN STOCK MARKET

To trade in the stock market you need a trading as well as a demat account. The process is not as complex as it looks to some of us. All you need is to understand the basics. Read on to know more.

Words: SANGEETA SINHA

To trade in a stock market you need demat and trading accounts. Demat (dematerialized) account is mandatory for trading in stocks. It is through a trading account that you buy or sell shares, while a demat account is like a bank where you deposit your shares and sold shares are taken from. Some banks offer the facility of saving, demat as well as trading at one place.
Now before we go into the details of trading and demat accounts let us understand what stocks are as explained to a layman. In simple words once any company lists on stock market, the shares of the company become available

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for trading on the stock exchange; just get registered with the stock exchange and start trading. Opening a trading account is simple; it can be done online through a broker. It is important that you select a good broker because expertise is crucial in stock market as within minutes rates change. It is a good idea to compare brokerage rates but it is advisable to go for brokers who provide good service rather than ones who charge you less. Once you decide on the broker contact them, fill up the forms, submit the necessary KYC documents and get ready to start trading in the stock market. After verification of your application you will be given your trading account details.
So with your trading and demat account in place you can easily do your trading. Make sure that you link your trading and demat accounts so that you avoid providing demat account details every time you trade.

Process is simple, place your order (buying or selling) through your trading account, the stock exchange will process and verify your order and then the shares will be either debited or deposited in your demat account.

INVESTOR VS TRADER
The goal of an investor and a trader remains same – trying to make profit in the financial markets, but the methods differ. The process of investing and trading differ in the way one operates; investing involves holding on to the investments for long periods of time taking advantage of interest, dividends etc. while trading involves regular buying and selling of stocks.
SOME HANDY TIPS

» Before planning to invest in stock market make sure you have some security money in case of any emergency

» Choose a good broker

» Don’t get carried away by advise given on whatsapp or Facebook, do your own study and invest

» Learn to time the stock market; don’t get carried away by short gains

» Review your portfolio at regular intervals

» Don’t allow your broker to trade; signing forms blindly and handing over to your agent may backfire

ASK THE EXPERT

Manoj Chaturvedi has rich experience of banking having worked both in India and Europe during last 16 years. Presently he is working with HDFC Bank Limited as Deputy Vice President in Wholesale Credit Risk. He is by qualification an MBA from XLRI, Jamshedpur and LLB from Faculty of Law, Delhi University.

What is Depository and Depository Participant (DP)?
A Depository is in fact similar to banks, where securities are held in electronic (dematerialised) form. In India, we are having two Depositories -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL).

Depository Participant (DP) is the place, where shares in physical form used to be deposited for the dematerialization purposes i.e converting the same to electronic form. DP is very akin to the bank branches.

Is it mandatory to dematerialize the physical share certificates?
No, it is not mandatory to dematerialize the physical share certificates. But all features of demat now can be accessed on mobile banking and easy to operate. Bonus / right shares gets easily credited to these account and transaction cost is also lower than it used to be in physical forms.

Can a person have more than one demat account in his name?
Yes, a person can have more than one demat account in his name; there is no restriction on that. An investor can open more than one account in the same name with the same Depository Participant (DP) or different DPs provided all KYC documents are submitted.

Can a demat account holder authorize another person to operate the same? If yes then how?
Yes, a demat account holder can authorize any person to operate his/her account by executing a power of attorney (POA) to this effect.

In case, any demat account holder wants to re-operate the account on his own, it can be done after having revoked the POA in writing.

Can I transfer shares to another demat account?
Yes, it is very much possible to transfer shares between demat accounts. The duly filled slip has to be submitted to the concerned DP and the transfer is done by NSDL or CDSL after receiving the document forwarded by the DP on behalf of the client. But the shares transferred from and the shares transferred to should fall under the same depositary i.e NSDL to NSDL and CDSL to CDSL.

I have some non-demat shares. How do I transfer them to demat account?
Open a demat account in the name of the person who has shares in the physical form and then ask the broker to demat the physical shares.

Can I have a joint trading account?
A trading account is always a single account that means there cannot be a second holder for a trading account, though you can have a nominee for a trading account. You can have demat account with a second holder and link multiple demat accounts to a single trading account.

Can I have multiple trading accounts?
Yes, you can have multiple trading accounts though not with the same broker. Though a second trading account would give you different trading platforms but it will add to your account opening charges and you will also have burden of keeping track of two accounts.

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CAUTION IS NEEDED

» It is important that you have understood the terms and conditions of the demat agreement before opening an account. Often people give power of attorney (POA) to their broker which he/she can misuse.
» Read all clauses properly before you give any POA or other instructions to your broker.
» Always keep your DIS in safe custody; every broker has to provide their client with a pre-numbered book-let.
» Check that your DIS book is in a serial order; in case of any missing page get it changed.
» DIS has to be filled every time a transaction is done; don’t give blank signed slips to your broker as it can be misused.
» You can protect your account by using the freeze option.

EDUCATION LOAN It’s simple, provided you are aware of all options

Planning to take education loan…read on to get the basics of this facility before you venture out in the market

WORDS: SANGEETA SINHA

Getting education loan is not very difficult as banks do not discriminate between toppers or average students. All that a bank looks for is that you have a strong guarantor and your documents are in order. The student should have an inclination to learn and should have the potential to repay.
Education loan options are plenty and even government is making efforts to make it simpler and easier for students. But before you finally apply for this loan you need to be clear in your requirements.

The most important point is to be sure about the loan amount you would require. The expenses would not only include the course fees but all other costs like travelling, boarding, food, books etc. Check out your own savings and then decide on the loan amount you would require. Students planning to study abroad should check on the currency rate too. Many banks/financial institutions offer loan for full expenses, so if you wish to take loan for all expenses look for banks which cover all.
Once you are sure on the loan amount, the next important point would be to compare the interest rates. Do your homework well and also figure out whether the interest amount will be invariable or will it change according to market trends.

And most important never default in your payments of education loans. If you do that you may have problem getting other loans in future as banks may mark you as defaulter. A default will spoil the credit score of both the student as well as the parents (co-borrower). If your EMI gets over due for more than 90 days the bank classifies the loan as a non-performing asset. In case of higher loan amount (more than 7.5 lakh) even the collateral will be at risk.
Repayment usually starts after the ‘moratorium period’, that is usually one year after end of your course or six months after the job whichever is earlier. You even have the option of repaying your interest during the study period; this helps lower the EMI. Some banks even give concession to those paying interest during the moratorium period. It is always a good idea to be prepared with a repayment strategy.
Though banks usually grant loan based on the capacity to repay; employment potential of the student is checked but still it may happen that you are not able to get a job. In such a scenario banks have policies for tenure extension but it may be little difficult to convince. As per the guidelines, the tenure can be extended up to 10 years for loans up to Rs 7.5 lakh and 15 years for loans above it.

Extension is also allowed in case the student takes up higher studies immediately after completing the course or if the student is unable to complete the course on time for reasons beyond his/her control.
It is also a good idea to take loans in installment because banks charge interest on the amount of money disbursed. If you have to pay fees semester wise then it will be smart move to take loan when required so that you save on the interest that accumulates.
Lastly, keep all documents related to loan in safe custody.

VIDYA LAKSHMI

Vidya Lakshmi is a first of its kind portal for students seeking Education Loan. This portal has been developed under the guidance of Department of Financial Services, (Ministry of Finance) , Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA).The portal has been developed and being maintained by NSDL e-Governance Infrastructure Limited. Students can view, apply and track the education loan applications to banks anytime, anywhere by accessing the portal. The portal also provides linkages to National Scholarship Portal.


Now that your loan amount and the interest rate are finalized, it is time to decide on the repayment time. Longer repayment tenures will help if you want low EMI but keep in mind that in case of longer tenure you will have to pay more interest. Make the down payment keeping in mind your budget and paying capacity; certain percentage is decided by the bank which you will have to pay mandatorily.

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SCHOLARSHIP AND LOAN

Education loan sanctioned by any bank remains independent of any scholarship. You are free to apply for any scholarship even after you have the loan sanctioned. The extra in the form of scholarship will help in reducing the loan burden.

ASK THE EXPERT

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Pushkar Karni Sinha, Senior Associate with Legal Consultus, a New Delhi based Law Firm, specializes in Civil, Corporate and Consumer Laws. An alumnus of National Law School, Jodhpur, he practices in the Supreme Court of India and Delhi High Court.

1. How much loan amount can I get?
It depends from bank to bank. However, the banks in India are providing need based education loans. For example, few banks are even providing education loan up to INR 1.5 crores for pursuing higher studies abroad (subject to compliance of Exchange Control Regulations).

2. Any guidelines to students applying for education loan.
The education loan applicants should approach the nearest branch of their choice, preferably where the loan seekers are having their bank account, along with requisite documents. This minimizes the queries with respect to the credentials of the applicants.
Generally, the Applicants need to furnish the following documents along with the completed application form of the student, guardian (when the loan is jointly taken) as well of the guarantor (as the case may be):
» Mark sheet of last qualifying examination for school and graduate studies in India
» Proof of admission to the course
» Schedule of expenses for the course
» Scholarship documents, if any
» Passport size photographs
» Statement of bank account for the last six months of borrower
» Income tax returns
» Government approved proof of residence

3. How is the educational loan disbursement made?
The loan has to be disbursed in stages as per requirement/demand directly to the Institutions.

4. Does education loan also include travelling and other expenses like food, boarding, books etc or only the course fees?
It depends on the bank policies. Some banks even include two wheeler loans in an education loan with some maximum cap.

5. What is the age criteria required while applying for an educational loan?
There is no ‘minimum age criteria’. However, in case of minors, loan will be jointly in the name of parents and the student shall ratify the borrowing by acknowledging the debt on attaining major status i.e. 18 years of age.

6. Is there a penalty for pre-payment?
No prepayment penalty will be levied for prepayment of loan any time during the repayment period.

7. Is education loanee ‘a consumer’?
Yes. A loanee does come within the definition of ‘a consumer’ as defined in the Consumer Protection Act, 1986. An aggrieved loanee may also approach the Consumer Fora under the Consumer Protection Act, 1986 for the redressal of one’s grievance against such Insurance Company.

LOAN CONDITIONS

• A co-applicant is a must, could be a parent or a sibling
• Loans below 4 lakhs do not require a guarantor
• Loans above 4 lakh need a third party guarantor
• Loans above 7.5 lakh need a collateral
• Insurance is mandatory to study abroad
• For studying abroad it is better to look for part time job or sponsorship as the loan amount may not be sufficient.


SOME HANDY TIPS

» Ensure that you have conditional offer of admission before approaching banks
» Look for a bank that offers best moratorium period, less interest rate and customer friendly terms
» Make sure that there are no penalties for prepayments or part payments
» If you have the capability, then it is always a good idea to go for short tenure and higher EMI rather than long tenure with low EMI
» Long tenure loans get expensive as you end up paying more interest
» Try paying the interest part during the moratorium period so that you have less burden later
» Opt for loan in installments so that you save on interest
» Try clearing the loan as fast as possible; use any extra money you earn to make part payments on loan so that you save on interest
» It is better to finish loan in first 8 years if you wish to avail the tax benefits on the interest you pay on your education loan
» The deductions are available only for the initial assessment years and seven years after
» Never default on paying your EMIs; it will hamper your as well as your co-borrower’s credit opportunities later
» And lastly don’t go by the false promises of agents
» Keep all documents handy including guarantor’s financial documents